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Under ideal conditions, file system read and write transfer performance is maximized
when files are contiguous on the disk. This means that all of the data in each file would
be located in consecutive clusters or blocks within the volume. Contiguous storage
improves performance by reducing unnecessary seek motions that are required when data is
located in many different places. When files are broken into many pieces they are said to
be fragmented. Fragmentation is a common occurrence in the FAT file system; if
you are unfamiliar with the concept, you may wish to review this full discussion of fragmentation and defragmentation.

The NTFS file system handles the storage of files and directories in a very different
way than the FAT file system does. FAT is a very simple, and relatively
"unintelligent" file system, that pays little attention to how much
fragmentation will result from how it operates. In contrast, NTFS is smarter about how it
manages the storage of data. For example, NTFS reserves space for the expansion of the Master File Table, reducing fragmentation of its structures.
Overall, fragmentation is less of a concern in NTFS than it is under FAT.

The superior disk management capabilities of NTFS mean that fragmentation is reduced
compared to FAT. Unfortunately, this led to a popular myth--that NTFS volumes have no
fragmentation, and therefore never need defragmentation. Microsoft unwittingly exacerbated
this problem by not providing any utility to defragment NTFS partitions in Windows NT,
implying that defragmentation was unnecessary. But this is simply not the case: NTFS
partitions definitely are subject to fragmentation. Many users of NTFS have never
defragmented their partitions at all, leading to avoidable performance slowdowns over
time.

In fact, due to their complexity, NTFS volumes suffer from a variety of different types
of fragmentation. Unlike FAT, where a simple cluster allocation system is used, NTFS uses
the Master File Table and a combination of resident and non-resident attributes to store
files. Due to the flexible way that data is stored, and that
additional data storage areas are added as needed, the result can be pieces of data spread
out over the volume, particularly when small files grow into large ones. Remember that
while NTFS has a much better design than FAT, at its core it does still store data in clusters. The addition and removal of data storage extents
causes much of the fragmentation of files and directories. As the MFT grows, it itself can
become fragmented, reducing performance further.

The solution to the problem of fragmentation under NTFS is the same as it is under FAT:
use a defragmenter. :^) For Windows NT, you will
need to use a third-party program, one of the most popular being the Diskeeper program by Executive Software. In its wisdom,
Microsoft decided to license the Diskeeper defragmenter technology and include it in
Windows 2000, so the operating system now includes a built-in defragmenter, though it is
likely either less capable or slower than the full Diskeeper program sold by Executive
Software. (As an interesting aside, Microsoft found themselves in the hot-seat as a result
of this licensing decision. The German government took issue with the defragmenter because
the CEO of Executive Software is a member of the Church of Scientology, and a big hoo-ha
resulted. How bizarre. As the old expression says, "I am not going there", but
you can read about this strange episode here.)